2020 has been an extraordinary year for people across the country, but also for government. The usual calendar of fiscal interventions has been trampled over by the demands of dealing with a global pandemic and the deepest recession on record.
We are at a critical point in the course of this pandemic. While the prospect of a vaccine has offered hope to people (and stock markets) worldwide, there is a long way to go yet. Decisions taken today will determine whether businesses can recover and the state and shape of the economy for years to come. Even once a vaccine is approved, rollout will not be achieved at least for six to twelve months in UK, and longer in a number of countries around the world that the UK trades with and that people travel to. All of us are likely to be living under some kind of restrictions for months and possibly years to come; and structural changes have already taken place across the economy. There is no ‘going back’ to the pre-pandemic economy, as if its course had merely been paused.
The pandemic has had dire consequences for people’s lives – not just in health terms, but economically. We are approaching a million people having lost their jobs. The number of families with children using foodbanks has doubled during the pandemic. This tide of hardship will only swell without adequate support for the economy, including through ‘scarring effects’ that will make it harder for businesses and people to survive and thrive.
It is in this context that the Chancellor will be weighing up his choices and interventions in the coming months – starting with the Spending Round.
There are five principles he must follow in his upcoming interventions, and which inform the recommendations in this paper:
- Economic and public health policy must move in lockstep. The concept of a trade-off between health and wealth is wrong and is holding back effective policy-making.
- Policymakers must get ahead of the pandemic. Too many decisions have been made at the eleventh hour, and the impact of good policies has been weakened as a result.
- The response must be commensurate with the scale of the challenge. Now is not the time to be timid
- The recovery must address the UK’s deep regional inequalities – including of health, income and power
- The recovery must have economic, environmental and social justice at its heart
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